China's steel price rose moderately at the beginning of 2005, continuing last year's trend.

At the beginning of February, China's steel price index grew from 125.21 points to 131.10 points, an increase of 4.7 percent over that at the end of 2004, according to related statistics from China Securities News.

The latest price of steel slab saw an increase of more than 4 percent over the end of last year and that of steel for construction use also witnessed a moderate growth, the paper said.

The price rise of steel slab and steel imports and exports contributed mostly to the increase in steel prices, said Yong Zhigang, a researcher with Haitong Stock Researching Center.

He said with an export of 1.92 million tons and import of 1.79 million tons, China's steel trade witnessed its first monthly surplus in last November, which left more room for steel dealers to raise prices in domestic market.

At the beginning of 2005, domestic steel plants has lifted producer price of steel slabs. Besides, the high price of steel internationally has greatly affected China's imports and the country has failed to meet domestic demand, Yong said.

As for the price of steel for construction use, sector insiders said the demand would increase as construction project begin again in the spring.

An expert with China's State Development and Reform Commission predicted room for steel price rise was limited in 2005. The changes in steel demand and supply mean that steel prices would be comparatively stable in 2005, he said.

Due to the macro-economic control measures, the demand for steel in the sector of real estate, one of the primary users, has declined. The demand for steel for auto manufacturing has also dropped.

According to incomplete statistics, China's steel output is expected to grow by 45 million tons, leading the yearly output to 300 million tons.

(Xinhua News Agency February 24, 2005)